liquidated damages

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Related to liquidated damages: Unliquidated damages

Liquidated damages

The amount payable for delays and sub-standard performance under a construction, equipment supply, or Operations & Maintenance contract.

Liquidated Damages

In some contracts, a set fee that one party must pay the other in cases of breach of contract. The amount of the liquidated damages is stated in the contract and is designed to compensate the grieved party when valuation of the breach would be difficult to ascertain.

liquidated damages

Damages agreed upon in advance by contracting parties.The parties will recite that if one or the other breaches the contract, it will be difficult to determine damages at that time.This is often true in situations where construction is delayed and a business cannot open on time or homeowners cannot take possession of their home when anticipated. Liquidated damages are used in a wide variety of cases, though, not just construction contracts.The parties will agree to an amount of damages, or a method of calculating damages, such as a certain amount per day. Most real estate sale contracts stipulate the earnest money deposit as the amount of liquidated damages.The catch with this system is that courts will not enforce penalties, which are illegal.If the liquidated damages do not bear some relationship to reality and the probable damages suffered by the innocent party, then courts will recharacterize them as penalties (completely unenforceable) or will reduce them to an amount deemed reasonable under the circumstances.

References in periodicals archive ?
At bottom, it appears that the court simply felt it needed to tread lightly where a contrary decision would leave the owner without any remedy for what were undoubtedly significant financial losses incurred, especially where, as here, reasonable liquidated damages had been set forth in the parties' agreement.
Although not required for enforceability that a liquidated damages clause explain in its own language what it is that makes the damages so difficult to calculate, it is required that the damages actually be difficult to calculate at the time the parties execute the lease.
So how then do we deal with the scenario where '0' is included against liquidated damages in the contract?
When considering liquidated damages clauses be careful to document the reasonableness of the amount and obtain the other parties' agreement to the amount.
A stipulated sum is for liquidated damages only (1) where the damages which the parties reasonably anticipate are difficult to ascertain because of their indefiniteness or uncertainty and (2) where the amount stipulated is either a reasonable estimate of the damages which would probably be caused by a breach or is reasonably proportionate to the damages which have actually been caused by the breach.
As to the liquidated damages Schleier received, the Court rejected the notion that these damages were intended to compensate the plaintiff for personal injury.
where the Fifth Circuit found in favor of the seller, Delta, and upheld the enforceability of the liquidated damages provision.
If the amount of the penalty to be paid reaches the maximum amount of liquidated damages, the contracting authority may terminate the contract with immediate effect.
As the right reoccurs it allows the party with the right to liquidated damages to waive, or not.
To construe the term 'nonrefundable' to establish [the sellers'] entitlement to the full deposit without regard to actual damages would essentially create a liquidated damages provision.
The contract down payment is routinely used as the liquidated damages sum.